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8/13/2019 Chapter 6 - Operating Plan
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Chapter 6: The Operating Plan
Tour 128Entrepreneurship
and
Business Planning
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Chapter 6: The Operating Plan
A. LocationB. Facilities, Lay-out and Design
C. Equipment and Supplies
D. SourcingE. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
Operating Plan
Describes the physical necessities of your
business operation, such as your business
location, facilities and equipment.
It may also include information about
inventory requirements and suppliers, and a
description of the manufacturing process.
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Chapter 6: The Operating Plan
It also describes how you will structure your
company and how you will actually carry out
everything you present elsewhere in your
business plan.
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Chapter 6: The Operating Plan
A. LocationB. Facilities, Lay-out and Design
C. Equipment and Supplies
D. SourcingE. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
Location provide the complete addresswhere your business is located. Describe the
surrounding area and explain how this
location can be effective.
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Chapter 6: The Operating Plan
If there are any disadvantages or possibleproblems presented by your location note itright away. Indicate what you have done to
counteract these negatives.
State whether you own or will lease the
property. Provide the terms of mortgage orlease. Present your monthly payment, lengthof term.
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Chapter 6: The Operating Plan Provide details of the square footage of the
property, If you have more than one location
be sure to describe each one. Note whether
you will outgrow the space and how will you
plan to handle a move/expansion.
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Chapter 6: The Operating Plan
A. LocationB. Facilities, Lay-out and Design
C. Equipment and Supplies
D. SourcingE. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
Facilities defined as the workspace neededto carry out the operations of the
organization. It is a space in which a business's
activities take place
Lay-out and Design - after choosing a location
for your business the next stage in operationsplanning is to design the best physical lay-out
for the facility.
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Chapter 6: The Operating Plan
The available space needs to be assessed withworkstations, equipment, storage and otheramenities needs to be arranged.
The aim is to allow for the most efficientworkflow without disruption. A business thathas carefully arranged its layout will allow for
a more effective and efficient workflow andproduce its good or services to a highstandard.
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Chapter 6: The Operating Plan
The Physical Plant What type of premises are they and what is the
size and location?
If it's applicable, include drawings of the building,copies of lease agreements, and/or recent real
estate appraisals.
You need to show how much the land or buildings
required for your business operations are worth,and tell why they're important to your proposed
business.
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Chapter 6: The Operating Plan
Describe your principal location. What are the
main uses of each site (training, conference,
administration, storage, etc).
Are you using all available space productively?
Do you have room to expand your operations
if needed?
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http://www.tbnc-california.com/Recreational%20Resorts.html
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Chapter 6: The Operating Plan
CRITERIA IN DETERMINING LAY-OUT ANDDESIGN:
A. Ease of Expansion or Change - Facilities
should be designed so that they can be easily
expanded or adjusted to meet changing
production needs. Any design should beflexible.
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Chapter 6: The Operating Plan
B. Flow of Movement - The facility design
should reflect a recognition of the importance
of smooth process flow.
C. Space Utilization - This aspect of facility
design includes everything from making sure
that every possible space has an important
use.
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Chapter 6: The Operating Plan
D. Ease of Communication and Support- Facilitiesshould be laid out so that communication within
various areas of the business and interactions with
vendors and customers can be done in an easy and
effective manner.
E. Impact on Employee Morale and Job Satisfaction -
Some ways layout design can increase morale areobvious, such as providing for light-colored walls,
windows, space.
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Chapter 6: The Operating Plan
F. Promotional value - If the business commonlyreceives visitors in the form of customers,vendors, investors, etc., you may want to make
sure that the facility layout is an attractive onethat improves the company's reputation.
G. Safety - The facility layout should enable the
business to effectively operate in accordance withOccupational Safety and Health Administrationguidelines and other legal restrictions.
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Chapter 6: The Operating Plan
A. LocationB. Facilities, Lay-out and Design
C. Equipment and Supplies
D. SourcingE. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
EquipmentWhat kind of equipment will
I need? (this will depend on the nature of
your business)
Example: Office Equipment will include:
Computers, Printers, Fax Machine,
Telephones, Internet Connection,Photocopier, etc.
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Chapter 6: The Operating Plan
Besides describing the equipment necessary
and how much of it you need, you also need
to include its worth and cost, and explain any
financing arrangements.
List your current plant and equipment
purchases. These can include vehicles,
computer equipment, phones and fax
machines.
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Chapter 6: The Operating Plan
For each item include a description of the plant
or equipment (make and model if applicable),
purchase date, purchase price and running costs.
If you have not purchased all of your equipment
yet, you can include a separate table and include
an expected purchase date.
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Chapter 6: The Operating Plan
Suppliers - Explain who your suppliers are and
their prices, terms, and conditions. Describe
what alternative arrangements you have made
or will make if these suppliers let you down.
List your main suppliers and detail what they
supply to your business. Also explain how youwill maintain a good relationship with them.
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Chapter 6: The Operating Plan
A. LocationB. Facilities, Lay-out and Design
C. Equipment and Supplies
D. SourcingE. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
A. LocationB. Facilities, Lay-out and Design
C. Equipment and Supplies
D. SourcingE. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
How will your production process work?
This section lays out the details of your
businessday to day operations.
Create an outline which includes hours ofoperation, days that the business will be open,
will it be seasonal?
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Chapter 6: The Operating Plan
A. LocationB. Facilities, Lay-out and Design
C. Equipment and Supplies
D. SourcingE. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
Flow Chart a step by step map of your
operations process. They help identify
inefficiencies and determine operating and
production costs, skills and labor required foreach stage of the process.
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Chapter 6: The Operating Plan
Map the process make a flow diagram depicting each stage of operations.
The flow chart must answer the following
questions: What are the different stages?
Who is responsible for each stage of operations?
How does work get transferred from one stage toanother?
Is any part of your operations outsourced?
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Chapter 6: The Operating Plan
Map the productions steps, it must respond to
the same questions above.
If your processes vary dramatically among
products, draw a map for each product.
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Chapter 6: The Operating Plan
A. Location
B. Facilities, Lay-out and Design
C. Equipment and Supplies
D. Sourcing
E. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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Chapter 6: The Operating Plan
Standard Operating Procedures describe how
a company conducts business.
Your SOP should document how quality
management systems and technical activities
function.
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Chapter 6: The Operating Plan
It typically define the procedures necessary to
maintain and use production systems so that
product output conforms to industry
standards.
Using these procedures, your staff can
complete job tasks reliably, consistently andsafely.
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Chapter 6: The Operating Plan
STEP 1 Identify the SOPs needed by your organization.
For example, create a list of SOPs required to
provide instructions on, operation, archiving and
support.
Identify who needs to contribute to generating
the SOPs and who needs to approve the
documents.
Set up a review process, and document when and
how revisions occur. SOPs should be evaluated on
a regular basis, such as every two years.
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Chapter 6: The Operating Plan
STEP 2 Create a title page for each procedure. List the
complete title. Each procedure should have a
descriptive title and number.
For example, label procedures related to
personnel with the letters HR for Human
Resources. Write a short summary describing the
purpose of the procedure and any other relatedprocedures.
List the necessary equipment and general safety
instructions.
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Chapter 6: The Operating Plan
STEP 3
Create pages containing detailed instructions.
Include the SOP number and specify the category
on each page as well. At the bottom of each page,include the current page number and the total
number of pages in the document.
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Chapter 6: The Operating Plan
Accounting Practices may include directives
for managing accounting documents, property
tax assessments, legal expenses and
confidentiality agreements. The handling anddocumentation of expenses for travel and
entertainment may also be included, as well
as bank account reconciliations and policieson credit cards and wire transfers.
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Chapter 6: The Operating Plan
Financial Procedures includes information
about financial reporting. Directives for annual
stockholder meetings, board of director
meetings and the release of financialdocuments related to forecasting, reporting
and analysis may be included. If the business
raises capital through asset acquisition, bankloans, leasing or stock options, the procedures
for these activities need to be delineated.
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Chapter 6: The Operating Plan
Computer and IT Procedures include
information about computer and information
technology processes, such as company policy
about Internet use, email, software andhardware evaluation, training plans and
troubleshooting. SOP may also reflect
standards for assessing the risk of technologysecurity breach and a recommendation to
conduct technology security audits.
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Chapter 6: The Operating Plan
Human Resources Procedures include
guidelines for candidate interviews and
background checks, as well as job descriptions
and policies for application processes.Compensation and benefits may be described,
with directives for employee health insurance,
retirement security benefits and payrollpolicies.
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Chapter 6: The Operating Plan
Sales and Marketing it is recommended that
businesses incorporate sales and marketing
guidelines into SOP, including guidelines for
market research and procedures for actionssuch as direct-mail marketing, advertising,
Internet marketing and public relations.
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Chapter 6: The Operating Plan
Security include measures for maintaining
safety and security may be a component of
SOP, as well as statements about ethics,
guidelines for the employee conduct code andsteps to take during emergencies, such as a
fire or natural disaster.
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Chapter 6: The Operating Plan
List your current inventory items. For eachitem include:
a brief description of the inventory item (includingmake/model, name or reference number)
unit price
quantity you have in stock total cost or value of the inventory item (Calculate
unit price multiplied by quantity).
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Chapter 6: The Operating Plan
Explain how you will keep track of your inventory.
An Inventory Strategy is a day-to-day
methodology to follow for ordering, maintainingand processing items in your business.
Inventory is one of the largest capitalinvestments every business makes.
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Chapter 6: The Operating Plan
Quality Control is the key to productstandardization and repeat patronage.
It simply means that you are able to provide
consistent products and services to yourcustomers.
Consistency is an important product attribute
for retaining customers because it gives themcomfort of knowing exactly what they will get
with every purchase.
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Chapter 6: The Operating Plan
A Quality Assurance Plan includes an
organizational structure, details on each
employees responsibilities and qualifications
needed to fulfill those responsibilities.
Another requirement is that the materials
used for production must meet thespecifications for manufacturing a product of
a desired quality.
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Chapter 6: The Operating Plan
Your quality plan must also specify the
standards of the prospective suppliers must
meet before a contract (ISO certified, etc).
It also implements feedback through
investigation of customer complaints and
correction of non-compliance issues.
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Chapter 6: The Operating Plan
Customer Service is important for every
business. Convincing customers that they will
receive professional customer service from
you is a major challenge.
Rendering excellent service can be achieved
by having clear policies and procedures,professional staff and solid systems.
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Chapter 6: The Operating Plan
Customer service revolves around thefollowing:
Efficient order fulfillment and processing
Ability to track and maintain accurate information
Politeness and attitude of employees
Maintenance and repair policies
Ease of payment Reliability of service (do you do what you say you
are going to do?)
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Chapter 6: The Operating Plan
Quality Assurance means developing
operational controls to ensure that the results
match the desired outcomes.
Customer Service Operations are designed to
keep customers satisfied while protecting the
organization.
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Chapter 6: The Operating Plan
A. Location
B. Facilities, Lay-out and Design
C. Equipment and Supplies
D. Sourcing
E. Production and Service Procedures
1. Production and Service Flow Chart
2. Standard Operating Procedures
F. Inventory Management and Control
G. Quality Control and Customer Service
H. Maintenance
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